American and JetBlue will begin codesharing on flights from the New York area and Boston during the first quarter. In addition, they will begin aligning their schedules from those markets during the first half of this year as they implement a Northeast alliance that they announced last July.
The partnership will also offer reciprocal frequent flyer point accrual at some point during 2021 and the carriers say they are exploring the possibility of recognizing loyalty status across both airlines.
The carriers say the alliance will allow them to recover more quickly from the Covid-19 crisis. The codeshare arrangement, as envisioned by the airlines in their July announcement, will give American customers access to 130 JetBlue routes out of Boston, JFK, LaGuardia and Newark. Conversely, JetBlue plans to affix its code on 60 American routes.
American envisions the partnership facilitating new long-haul service from New York to markets in Europe, Africa, India and South America while JetBlue has pledged to grow in the New York metroplex.
Still, the partnership has raised concerns among rival carriers and it was only approved by the DOT after the airlines agreed to a variety of steps designed to reduce the possibility that the deal will reduce competition.
In regulatory filings over the past week, Spirit, Southwest and the National Air Carrier Association, which lobbies for ultralow-cost carriers, argued that the tie-up will in fact lead to less consumer choice in the Northeast, where competition is already constrained by takeoff and landing slot limitations at several airports.
The two carriers offer overlapping service on 26 routes out of JFK, LaGuardia and Boston, Spirit said in a complaint to the DOT.
"It is unrealistic to think that American and JetBlue will actively compete against each other in the 26 overlap markets spread between BOS, LGA and JFK, meaning that each of these markets will effectively lose a competitor," Spirit wrote, using codes for the three airports. "Overall, there will be less competition nationally from these airports as well as from Newark if these agreements are approved."
To ameliorate such issues, JetBlue has agreed to continue to fly all year-round routes it offered out of JFK as of February 2020 except flights to Long Beach and Oakland, Calif., and Worcester, Mass.
In addition, American will divest of four daily slots pairs at JFK and four daily slot pairs at Washington Reagan. JetBlue will surrender three daily slot pairs at JFK and two at Reagan.
The airlines would also be required to give up as many 10 more combined slot pairs at JFK if they don't meet agreed upon capacity targets for JFK and LaGuardia combined. Formulas for the target are somewhat convoluted, but generally speaking, the target requires the airlines to be flying 5% more capacity combined out of those two New York airports in 2022 than they did before the pandemic, with an adjustment allowed for the JFK slots they will divest of. A similar rate of growth would be required through 2025.
The American-JetBlue partnership will go beyond typical codeshare and loyalty program agreements by including provisions for the carriers to swap slots between one another. The DOT will also allow the two airlines to make joint scheduling decisions, but only at Boston and the three New York-metro airports where the alliance is operating.
The tie-up stops short of being a joint venture, however, since the carriers are forbidden from discussing fare levels or revenue management both within and outside the geographic confines of the Northeast alliance.
American and JetBlue say the partnership will actually increase consumer choice.
"Through this alliance, we are one step closer to bringing customers even more competition in the Northeast, especially on routes currently served by only one airline with high fares and poor service," said Scott Laurence, head of revenue and planning at JetBlue.